NNPC faults AG on alleged non-remittance of N3.235tr

• Corporation denies operating ‘secret’ account
The Nigerian National Petroleum Corporation (NNPC) has accused the Auditor General of the Federation, Sambo Ukura, of being ignorant of how remittances of crude oil sales into the Federation Account works in his submission to the National Assembly.

Speaking on the alleged non-remittance of N3.235trillion in 2014 by the Auditor General in Abuja yesterday, the Group Executive Director/Chief Financial Officer (Finance and Account) of the NNPC, Isiaka Abdulrazaq, explained that the unrefined portion of the 445,000 that is allocated to the NNPC for domestic refining is sold for onward transmission to the Federation Account after deduction of the cost associated with the supply and distribution of petrol.

Providing more explanation on the alleged operation of ‘secret’ account from where $235million was transferred to an undisclosed Escrow account, the corporation denied having any secret account.

Abdulrazaq provided an insight, saying: “The fact is that the alleged $235million represents proceeds from the sale of gas feed stock to Nigerian Liquefied Natural Gas Limited (NLNG) that was used to repay part of the Modified Carry Agreement (MCA) loans, applicable royalty to the Department of Petroleum Resources (DPR) and tax to the Federal Inland Revenue Service (FIRS). The MCA loan was contracted specifically to fund the development of upstream oil and gas projects whose transactions are regularly reported to FAAC as part of the reconciliation of the revenues to NNPC, FIRS and DPR. The MCA and all other alternative funding arrangements are annually appropriated by the National Assembly and are therefore fully disclosed to FAAC on monthly basis.”

He then said that the declaration by the Auditor General might have been borne out of misunderstanding of how revenues from crude oil and gas sales are remitted into the Federation Account.

Abdulrazaq added that as a major supplier of petroleum products to the nation, NNPC is entitled to claims on subsidy from petroleum products sold at government-regulated price (whether imported or locally refined).

He further stated that the total amount of subsidy that has been approved and certified by PPPRA for the period of January 2012 to December 2014 was N2.34trillion out of which an additional N7.96 billion subsidy claim is still under reconciliation.

Providing more explanation on how NNPC incurred its losses, he revealed that losses from crude oil and petroleum products as a result of vandalism on its network of pipelines for the period of January 2012 to December 2014 were N202.68 billion.

According to the national oil giant, the petroleum product strategic holding cost and pipeline repairs and maintenance cost for the period of January 2012 to December 2014 amounted to N358.88Billion. “Consequently, the figure owed to the Federation Account as at January 2015 Federation Account Allocation Committee (FAAC) meeting report was N326, 142,137,205.79 and not the N3.23 trillion alleged by the Auditor General of the Federation.”

He was quick to add that this report does not include NNPC’s claim, as at 2009, of N1,374,856,321,401.00 against the Federation.

Abdulrazaq claimed that all the stakeholders in FAAC meeting are familiar with the N326.14 billion and it is already in public domain since then to date.

He also explained that the N1.374 trillion claim against the Federation is currently under a review by FMF- appointed Forensic Auditors at the instance of the Minister of Finance.

“It is clear that the AGF failed to reflect all the figures as they should be, not minding the fact that there is a clear process in conducting FAAC meetings where all Federation revenues are presented, discussed and approved. There are series of meetings before and after FAAC meetings to reconcile and resolve any issue as the need may arise.”

While still faulting the procedure adopted by the Auditor General in releasing the audit query, Abdulrazaq declared that the best practice and established due process is that after any audit. there should be an exit meeting between the auditor and the auditee where any outstanding issues are finally discussed and explained before the issuance of the audit report. According to him, there was no such meeting and NNPC did not receive any draft report from the Auditor General’s office for comments.